Economic Growth and Trade

cycle (Economic cycle)

ECONOMIC GROWTH AND TRADE CYCLE
(ECONOMIC CYCLE)

The trade cycle is a periodic fluctuation in

economic activity. So, actual growth tends
to fluctuate. In some years, countries will
experience high rate of economic growth
which means the country experience a
boom. In other years economic growth is
low or even negative and the
 
THE PHASES OF THE TRADE CYCLE
 1. The slump (depression)

 
2. The upturn (recovery)
  
3. The peak (boom)
 
4. Down turn (recession)
THE PHASES OF THE TRADE CYCLE
 1. The slump (depression)
 It is a period in which national output slows
down and become negative due to a
reduction in demand.

2. The upturn (recovery)

 It is a period when the economy moves
between recession and a boom.
THE PHASES OF THE TRADE CYCLE
 3. The peak (boom)
 It is a period of fast economic growth. Output is
high due to increased demand, unemployment is
low. Business confidence may be high leading to
increased investment. Consumer confidence may
lead to extra spending.

4. Down turn (recession)

 It is a period where economic growth slows down
and the level of output may actually decrease.
Unemployment is likely to increase. Firms may lose
confidence and reduce investment. Individuals may
save rather than spend.
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